£2.09M Finish and Exit Development Facility

Colenko provided a £2,088,000 finish and exit facility for a first-time developer completing a part-built residential scheme in Wallington.

The borrower had already committed their own capital to the project, which included seven flats and two semi-detached houses. The scheme had strong fundamentals and a clear exit through the sale of completed units, but it also had live planning, compliance and technical issues that needed to be controlled as part of the funding structure.

The borrower was a first-time developer operating through an SPV and taking on a relatively large scheme for their experience level.

They had already funded the early stages of the project using their own capital. That showed commitment, but it also meant the scheme had progressed without the structure and oversight that would usually be in place if institutional funding had been involved from day one.

The borrower’s credit profile was strong, and there was clear evidence that they were hands-on and engaged with the project. The key question for Colenko was not whether the borrower was committed. It was whether the scheme could be brought under control and taken through to completion cleanly.

The transaction involved a part-complete residential development in Wallington, with planning in place for seven flats and two semi-detached houses.

The borrower had started works and fully deployed their own capital before reaching the point where further funding was needed. The requirement was for a finish and exit facility that could support completion of the scheme and allow the borrower to repay the loan through open market sales.

The underlying project made sense. There was a defined residential scheme, a clear sales-led exit and enough progress on site to support the case for funding. The issue was not the viability of the scheme in principle, but the way the project had been managed before structured finance was introduced.

This was a part-complete scheme with live planning, compliance and technical issues. Those points needed to be understood before funding could be committed.

Because the borrower had self-funded the early stages, some areas had been handled pragmatically rather than formally. That is not unusual on self-funded projects, but it can create challenges when a lender steps in part-way through a development.

There were points to resolve around building regulations, warranties, planning condition discharges and party wall matters. There was also an active technical issue involving a stair core and fire regulations, with the borrower already engaging with building control at the point of underwriting.

The borrower’s experience also needed to be considered carefully. This was a first-time developer taking on a multi-unit scheme, so Colenko had to balance experience risk against the progress already made, the borrower’s commitment, the strength of the underlying project and the planned sales exit.

Colenko focused on what needed to be resolved before completion, and what could be controlled during the term of the facility.

Some issues had to be dealt with upfront. Others could be managed through the structure of the loan and monitored as the scheme progressed. Critical planning and compliance points were prioritised, while lower-risk items were addressed through conditions subsequent tied to drawdown.

This included requirements around planning condition discharges, building regulations approvals and party wall matters. Where appropriate, drawdowns were restricted or capped until the required evidence was provided.

The aim was not to wait for every outstanding point to be perfect before funding. The aim was to create a controlled and deliverable route through to completion, with the right protections built into the facility.

The facility was structured around an initial advance and staged drawdowns.

The legal and funding structure made careful use of conditionality, allowing the facility to complete while still maintaining control over key risk items. This was particularly important because the scheme was already live, and progress needed to continue while planning, compliance and technical formalities were brought into line.

Colenko maintained close engagement with the borrower and professional team throughout the process, ensuring drawdowns remained linked to progress, evidence and risk control.

Colenko delivered a £2,088,000 finish and exit facility to support completion of the residential development.

The facility provided both an initial advance and staged drawdowns, allowing the borrower to move from a self-funded, part-complete project into a fully funded scheme with a clear path to exit through the sale of the completed units.

The structure gave the borrower the funding needed to keep the project moving, while ensuring key planning, compliance and technical matters were controlled during the loan term.

In this case, the lending decision depended on the underlying viability of the scheme, the borrower’s commitment and the ability to control live planning, compliance and technical risk through the facility structure.

The key points were:

• First-time developers can be supported where the project fundamentals and exit strategy are strong
• Part-complete schemes can be funded where the remaining risks are understood and properly controlled
• Planning, building regulations and compliance issues do not always prevent funding, provided there is a clear route to resolution
• Conditions subsequent can be used to manage lower-risk outstanding items during the loan term
• Staged drawdowns can help align funding with progress, evidence and risk control
• Finish and exit facilities can provide a practical route from self-funded progress to completion and sale